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Studies on Health Care Spending Fuel Reform Debate

It’s generally considered impolite to talk about money, but that rule goes out the window — at least theoretically — when Congress is charged with crafting a deficit-neutral bill to overhaul the health care system.  In fact, some of the biggest sticking points in the debate have been about money, especially how much reform would cost and how it would be paid for.

The White House Office of Management and Budget wasted no time in spotlighting an Institute of Medicine study concluding that there is $800 billion in excess costs in the U.S. health care system each year.  Hitting on the largest items on the list, the report says high administrative costs for insurers, doctors and hospitals account for about $200 billion of these costs, while unnecessary services account for another $200 billion.

That’s money that could be used more effectively elsewhere, OMB Director Peter Orszag writes in his blog, arguing that the data underscore the need for health care reform.

The report goes on to list strategies for cutting out these extra costs, and Orszag writes that most of these recommendations are ideas the Obama administration supports and congressional lawmakers have included in reform proposals.

But Sen. Dianne Feinstein (D-Calif.) for one is questioning the shape that these proposals have taken.

In an Oct. 2 release, Feinstein explained that she sees insurance reform as the crux of a health care overhaul. Feinstein advocates doing away with state-level regulation of health insurers and comes out in favor of regulating premiums, but she remains dubious about the prospects for current proposals to make these changes.

Feinstein writes, “I am concerned that bills [congressional committees] report out will be so big, and so complicated, with so many mandates and subsidies that it will be difficult to achieve these important goals.”

Which begs the question, “What then?”

Research from the Robert Wood Johnson Foundation seeks to explain just that, laying out estimates for the best-, intermediate- and worst-case scenarios for the nation and individual states if health care reform doesn’t pass this year.

The report projects that absent health care reform, California’s worst-case scenario would have 27% of the population uninsured in 2019, up from 21.9% in 2009.  The best-case scenario would be an uninsured rate that increased to 23.6% over the next 10 years.

Similarly, the report’s worst-case scenario sees Medi-Cal and Healthy Families spending increasing by more than 110% from 2009 to 2019, hitting almost $60 billion. The best-case scenario sees spending on those two programs increasing by 65.6% to $46.16 billion over the same period.

These are some of the ideas weighing on members of Congress as they stake out their positions on the current group of proposals.  Here’s an update on other reform news from the past week.


  • The Senate Finance Committee has not passed its reform bill, but Senate Majority Leader Harry Reid (D-Nev.) already has begun to merge it with the proposal by the Senate Health, Education, Labor and Pensions Committee, CongressDaily reports. The merging of the two bills is also being overseen by Obama administration officials, Finance Committee Chair Max Baucus (D-Mont.) and Sen. Christopher Dodd (D-Conn.), who oversaw the HELP markup. New HELP Chair Sen. Tom Harkin (D-Iowa) also will be involved in the process (Friedman, CongressDaily, 10/2). 


  • In an Oct. 5 appearance on “The Charlie Rose Show,” House Speaker Nancy Pelosi (D-Calif.) said she hopes lawmakers can deliver a reform bill to President Obama by Thanksgiving, Roll Call reports (Newmyer, Roll Call, 10/6).
  • On Oct. 1, House Majority Leader Steny Hoyer (D-Md.) announced that he and House Minority Whip Eric Cantor (R-Va.) could meet next week to discuss areas of agreement on health care reform, CQ Today reports. Hoyer suggested the meeting more than two weeks ago after Cantor publicly stated that there was bipartisan agreement on 80% of the ideas regarding health reform (Epstein, CQ Today, 10/1).
  • On Sept. 29, Pelosi indicated that House leaders have identified $200 billion in cuts to their health reform legislation (HR 3200) to meet Obama‘s goal of keeping health reform’s price tag at $900 billion over 10 years, Roll Call reports (Newmyer, Roll Call, 9/30). House leaders met on Tuesday to discuss possible measures to lower the price of the bill, currently estimated to cost $1.1 trillion over the next decade (Hunt/House, CongressDaily, 9/30).
  • Pelosi announced that the House will put its complete reform legislation on the Internet for “several days” before its floor vote, CQ HealthBeat reports (Norman, CQ HealthBeat, 9/30).

Senate, House Differences

  • The individual mandate that would require U.S. residents to obtain health insurance is one of several large issues that are expected to be debated on the floors of both chambers, the New York Times reports. Also up for debate is whether employers should be mandated to provide health benefits to their employees or pay a penalty, and how to provide low- and middle-income people with subsidies to purchase insurance (Pear/Herszenhorn, New York Times, 10/4).

Republican Opposition

  • On Sept. 30, House Minority Whip Eric Cantor (R-Va.) said that President Obama has not hosted bipartisan congressional leaders at the White House to discuss health reform legislation since May, the Washington Times reports. Cantor said that Obama initially requested Republicans’ help in developing reform legislation but has since not contacted the GOP again. Administration officials disputed Cantor’s allegations (Dinan, Washington Times, 10/1).
  • On Oct. 7, HHS Secretary Kathleen Sebelius will meet with members of the Republican Study Committee, Roll Call reports. The group has sought for months to meet with Obama to discuss the GOP’s alternatives to the Democrats’ health reform plans, and it has long accused the administration of blocking GOP members from the health reform debate. A GOP aide said that a meeting with Sebelius was offered as an alternative to Obama despite the GOP’s pleas (Kucinich, Roll Call, 10/5).
  • House GOP members will hold meetings with their Democratic counterparts in the coming days. A group of 10 to 12 lawmakers from the House Ways and Means, Education and Labor, and Energy and Commerce committees will meet to discuss bipartisan plans for reform. Rep. Charles Boustany (R-La.), who is helping to coordinate those meetings, said that the GOP may be able to cut deals with Democrats on consumer protection measures, improvements to health care delivery and the language used to prevent denial of insurance based on pre-existing conditions (Ota, CQ Today, 10/5).
  • Republicans opposing Democratic health care reform proposals have streamlined their opposition message to assert that the plans include “hidden and not-so-hidden taxes” that violate Obama‘s campaign pledge not to raise taxes for families with incomes of less than $250,000 a year, the New York Times reports. The Republican National Committee will launch a new advertisement highlighting four provisions of the proposals Republicans say constitute taxes, RNC Chair Michael Steele said (Nagourney/Herszenhorn, New York Times, 10/2).

Shaping the Debate

  • Hospitals and health insurance companies are concerned that the Senate Finance Committee health reform bill would not do enough to expand the number of insured people, which could affect their bottom lines, the Wall Street Journal reports. According to the Congressional Budget Office, the bill would increase the proportion of insured Americans from 85% to 91%, though 25 million people would remain uninsured. Chip Kahn, president of the Federation of American Hospitals, said an agreement hospitals made to accept $155 billion in payment reductions was contingent on reform legislation insuring 94% to 95% of Americans. At the same time, health insurers have said that proposed penalties for individuals who do not purchase insurance are not enough to force most people to have health coverage (Adamy/Hitt, Wall Street Journal, 10/6).
  • The Advanced Medical Technology Association, which represents large medical device makers, is seeking to reduce the amount of new fees the industry would face over the next 10 years from $40 billion to $15 billion, according to the Journal. The Senate Finance Committee‘s bill includes the $40 billion figure, which would offset the legislation’s cost. AdvaMed spokesperson Wanda Moebius called the counteroffer “rumors and speculation” (Mundy/Vaughan, Wall Street Journal, 10/5).
  • More than 20 House members and three senators — mostly from states that are home to large device makers, including California and Minnesota — have sent separate letters to the Finance Committee expressing opposition to the proposed tax on device makers (Fritze, USA Today, 10/1).
  • Many physicians oppose a provision in the Senate Finance Committee‘s health reform legislation that would penalize doctors who perform the most tests and procedures by cutting their Medicare reimbursements, the Journal reports. While the provision’s proponents say it is necessary to reduce wasteful spending and curb the “overutilization” of care, critics contend that it represents too large an intrusion by the government into medical decision-making and that it will “discourage doctors from taking the sickest and oldest” patients, according to the Journal (Adamy, Wall Street Journal, 10/2).
  • AARP officials say they are focused on strengthening Medicare but also are keeping in mind the needs of their younger members, the New York Times reports. The group’s membership is split between those ages 50 to 64, who often have trouble with their health insurance, and those 65 and older, who are covered through Medicare and often are not concerned about the health struggles of those who are younger (Harris, New York Times, 10/4).
  • Americans United for Change has launched a new Web ad that puts together video clips of various Republican lawmakers offering their “health care solutions,” the Boston Globe‘s “Political Intelligence” reports. The ad shows clips of Republican lawmakers suggesting that people without insurance go to emergency departments and seek charity care. It also insinuates that Republicans would tell those seeking better benefits to find a job with the federal government and for those trying to reduce costs to drop maternity care (Rhee [1], “Political Intelligence,” Boston Globe, 9/30).
  • On Oct. 5, the advocacy group Consumers Union was set to launch its first-ever television ad in favor of a cause, defending current health reform proposals supported by the White House, Politico reports. The group also has a Web site promoting current health reform proposals, with a focus on supporting cost controls and structural changes to shift incentives for providers toward more effective care (Smith, Politico, 10/1).
  • On Sept. 30, the Democratic National Committee launched a television ad criticizing the GOP‘s warnings to seniors of reduced Medicare benefits as a result of a health care overhaul, the Globe‘s “Political Intelligence” reports. The ad notes AARP‘s assertion that Republicans are using “scare tactics” (Rhee [2], “Political Intelligence,” Boston Globe, 9/30).
  • In early October, advocacy groups launched television advertising campaigns in states represented by moderate congressional Democrats to urge them to include a public insurance plan option in health reform legislation, the Washington Times reports. The ads — which are running in several states, including Arkansas, Florida, Louisiana and North Carolina — are sponsored by the NAACP National Voter Fund, the National Council of La Raza, the Campaign for Community Change, the Leadership Conference on Civil Rights, Power PAC and the United States Student Association. The groups say that health reform legislation that includes a public option is a civil rights issue (Haberkorn, Washington Times, 10/6).
  • Many members of Congress, including several prominent in the health care reform debate, have “received significant contributions” from lobbyists and the health care firms they represent, according to a report from the Center for Responsive Politics and the Sunlight Foundation, the Washington Post‘s “Capitol Briefing“ reports. This “one-two punch” led to large contributions for Senate Finance Committee Chair Max Baucus (D-Mont.) and Senate Health, Education, Labor and Pensions Committee member Christopher Dodd (D-Conn.), who both oversaw committees that crafted health care legislation, and Senate Minority Leader Mitch McConnell (R-Ky.), according to the report. The report found that in total, 61 members of Congress, including 39 senators, received money from 10 or more lobbyists whose clients also contributed to their campaigns. According to the report, 62% of those lawmakers were Democrats (Eggen, “Capitol Briefing,” Washington Post, 10/1).
  • A broad coalition of advocacy groups has joined together against a provision in the Finance Committee’s bill that would provide employees premium discounts if they participate in wellness programs, CongressDaily reports. Under the provision, employers would be allowed to offer workers in wellness programs, such as weight loss and smoking cessation clinics, discounts of up to 30%, up from the current federal limit of 20%. The Senate HELP Committee‘s bill also includes a similar provision. The groups — which include labor unions, women’s rights groups and mental health advocates — said that the provision would enable employers to raise premium rates on their unhealthiest employees, forcing them to drop their coverage (Dann, CongressDaily, 10/6).


  • The Kaiser Family Foundation tracking poll, conducted in mid-September with 1,203 respondents, found that 42% of U.S. residents believe their families would be better off with a health system overhaul, up from 36% during the heat of August’s town-hall meetings, CQ HealthBeat reports. Fifty-seven percent of Americans also believe that health reform is more important now than ever, up from 53% in August. The poll also revealed that about 57% of Americans support making insurers pay a fee based on how much business they have, while 59% would support a tax on expensive insurance policies and 68% support a requirement for individuals to have health insurance (Reichard, CQ HealthBeat, 9/29).
  • A mid-September poll conducted by Thomson Reuters found that 63% of U.S. residents would be willing to pay more for health reform, Reuters reports. However, only 35% said the debate in Congress would lead to improved health care and 41% believed reform efforts would lower health costs (Morgan, Reuters, 9/30).
  • A Harvard University/Kaiser Family Foundation/NPR poll, conducted from late August through mid-September, found that 71% of Americans feel Congress is paying too little attention to what the public is saying about the health reform debate, NPR’s “Morning Edition” reports. The poll asked which interest groups the public trusts on health care and also found that Americans blame insurers, drug companies and the government for the health system’s current problems (Rovner, “Morning Edition,” NPR, 9/30).

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